Situs RERC: Opportunities in Dallas, Seattle, San Francisco
Dallas, Seattle and San Francisco offer commercial real estate investors the best opportunities among large markets from a relative value vs. price perspective, reported Situs RERC, Houston.
Situs RERC ranked 48 metros in primary, secondary and tertiary markets from a relative value for the price perspective to determine the best investment opportunities.
“The index is meant to reflect where investors will receive the best relative value based on current pricing and market fundamentals,” said Situs RERC President Kenneth Riggs.
CBRE, Los Angeles, said Dallas’s annual employment growth rate has doubled the national annual rate for the past five years and estimates the city’s average per capita personal income is nearly 7 percent above the national average.
“Relatively low prices, strong population growth, income growth and job creation are driving the demand for commercial real estate in the area,” the report said. “The population and job growth should continue as Texas draws employers because it has no income tax.”
In addition, Dallas will likely continue to thrive as a logistics hub as e-commerce flourishes, Situs RERC said. “Moreover, Dallas has become a hot spot for data centers due to low construction and utility costs in the region.”
Seattle ranked second among primary markets. “Originally, Seattle was home to companies like Amazon, Microsoft, Zillow and Expedia,” Situs RERC said. “Now it has a talent pipeline that has been attracting other tech companies to the metro including Google, Facebook, Apple, Twitter and Salesforce.”
Because these technology companies attract highly educated, high-earning professionals, the Seattle office market has become an investor favorite, the report said. “Additionally, the absence of a state personal income tax and its relative affordability have been driving Seattle’s population growth, which is a benefit for the apartment and retail sectors. Moreover, Seattle’s geographic location as a large port city with direct access to Asia adds strength to the sustained growth of the metro.”
Despite some concerns over affordability, San Francisco ranked third among primary metros due to employment growth and per-capita personal income growth both nearly double the national average.
“The San Francisco market continues to be dominated by technology, a sector that is still very healthy,” the report said. “However, new supply coming into the office space has worried investors because not all the space has been pre-leased. [But] the metro’s thriving technology industry, along with some of the country’s most prestigious educational institutions in San Francisco’s backyard, should continue to provide stability to the market.”
Chicago and Washington, D.C. ranked fourth and fifth, respectively, among primary markets, Situs RERC said. Orlando, Fla., Austin, Texas and Raleigh, N.C. offer investors the best opportunities among secondary markets and Tucson, Ariz., Columbus, Ohio and Richmond, Va. ranked highest among tertiary markets.
